WWD.com/business-news/financial/carrefour-sees-firm-signs-of-recovery-7644976/
government-trade
government-trade

Carrefour Sees Firm Signs of Recovery

Such was the promise of Georges Plassat, chairman and chief executive officer of the French group, which held its annual shareholders meeting here Tuesday.

PARIS — Carrefour SA, the world’s second-largest retailer after Wal-Mart Stores Inc., is well on the road to recovery and will step up its rejuvenation drive in 2014. Such was the promise of Georges Plassat, chairman and chief executive officer of the French retail group, which held its annual shareholders meeting here Tuesday.

“We have reached the end of the most difficult period,” said Plassat, adding that the company was “halfway through” the three-year recovery plan it initiated in 2012, when he came onboard.

The company’s net income last year vaulted 532 percent to 949 million euros, or $1.3 billion at average exchange, as reported.

On Tuesday, Plassat and his chief financial officer, Pierre-Jean Sivignon, drew particular attention to the group’s internal growth, which was “very robust,” up 2.3 percent excluding fuel, due to a 1.3 percent rise in like-for-like sales. “That’s the best figure we had since 2007,” Plassat said.

The executive called the rebound “significant and a result of our strategy,” adding that the group was far from being finished.

On top of the agenda: making Carrefour leaner and younger.

“As of this year we will renew our managerial and executive staff, whose age has gone up, as in many long-standing companies,” said Plassat, adding that “to ensure professionalism,” changes were needed.

“Also, some of our stores are 30 years old,” he noted, pledging to continue investments to renovate stores and improve day-to-day operations.

Separately, the executive unveiled the creation of Carmila, a company encompassing the 172 shopping malls adjoining Carrefour’s hypermarkets, 127 of which the retailer bought in December to boost its European hypermarket business.

“This is a wonderful project which will create value in the middle term. The idea is to make our shops more attractive through joint activities and to remain lively,” Plassat said.

The retailer is slated to invest between 2.4 billion euros and 2.5 billion euros, or $3.3 billion and $3.45 billion, in 2014.

Plassat noted the company would start with “click and collect” in France at the end of May, while also relaunching its e-commerce in Brazil, which had been shut down “because of huge losses.”

In fact, the only area of business where the age factor will move in the opposite direction concerns Plassat himself. Shareholders voted in favor of a resolution raising the allowable age of its acting ceo to 70 years, an expression of confidence vis-à-vis the 65-year-old Plassat, who is regarded as an energetic leader with a clear vision for the group.

In addition, the shareholders approved Plassat’s salary, which in 2013 stood at 3.8 million euros, or $5.2 million, of which 1.5 million euros, or $2.1 million, was his fixed salary and 2.2 million euros, or $3.1 million, ran under “variable remuneration.”

The company received two votes of confidence recently. One came from Motier, the investment arm of the Moulin family, which owns 100 percent of Groupe Galeries Lafayette. Asked about the motives behind Motier’s recent acquisition of 6.1 percent of the French retailer’s share capital, Plassat said, “The family has put great trust in the company. They thought investing in our group was a good investment. That’s very encouraging.”

Carrefour, whose other prominent shareholder Bernard Arnault owns 8.9 percent of the company’s shares, has also been upgraded by Standard & Poor’s to BBB+ from BBB last March because of improving credit ratios.

The firm reduced its net debt from 4.3 billion euros, or $5.9 million, to 4.1 billion euros, or $5.7 million, mostly by divesting in the Middle East, Indonesia and Turkey, while continuing to consolidate the financial structure.

According to the ceo, the group’s problem zones remain Italy, where consumption is low, and Poland, where competition from discounters is stiff. By contrast, “there has been an upturn in consumption in Spain” and “profitability increased in all our formats.”

Shares in Carrefour closed down 0.3 percent to close at 28.29 euros, or $39.14, on the Paris Stock Exchange on Tuesday.